All posts tagged corporate taxes

WASHINGTON—The allegations that the Internal Revenue Service targeted conservative groups is proving to be a boost to the drive to overhaul the tax code, a senior member of a tax-law writing House panel said Wednesday.

Rep. Pat Tiberi (R., Ohio) said that the scandal is reinforcing the notion in lawmakers’ and voters’ minds that the IRS has too much discretion and that the wider tax code is broken.

“When you have the IRS scandal, it puts this at the top of people’s minds, it just reinforces that the IRS is broken, that the tax code is broken,” said Mr. Tiberi, speaking to reporters at a tax policy conference in Washington. Read More »

A group of 42 U.S. companies is announcing a potentially powerful new coalition on Tuesday to push for a comprehensive tax overhaul. The group – representing a broad cross-section of both multinational and domestic-focused big businesses – could give a boost to the slow-moving effort on Capitol Hill.

The new group, the Alliance for Competitive Taxation (ACT), is promoting a tax overhaul as a way to make the economy grow faster, attract more investment to the U.S., generate jobs and help companies compete against their international rivals. Coalition members are hoping a tax overhaul will prove to be a rare area of agreement for feuding Republicans and Democrats in Washington over the next couple of years.

Never mind cutting the corporate tax rate – the U.S. should be trying to get rid of it, Laura D’Andrea Tyson, a former top economic adviser in the Clinton administration, said Friday at a tax policy symposium.

“I would do as much as possible to get rid of the corporate tax rate,” Ms. Tyson, now a University of California professor and sometime adviser to the Obama administration, said in keynote remarks. She cited the corporate tax’s harmful effects on economic growth.

Ms. Tyson spoke at a conference sponsored by the Tax Policy Center and the International Tax Policy Forum, a business-sponsored research group. Read More »

Another sign of life in the effort to overhaul the much-maligned U.S. tax code: A new coalition of big-name companies plans to launch on Thursday, pressing for modernization of the rules affecting multinationals.

The formation of the LIFT America Coalition (short for Let’s Invest for Tomorrow) signals that big U.S. multinationals are taking the possibility of a tax rewrite more seriously. The group includes more than a dozen major firms, mostly from high tech, pharmaceuticals and manufacturing. Big names include Caterpillar Inc., Intel Corp., Procter & Gamble Co. and Coca-Cola Co.

Already, big domestic retailers, utilities and defense firms have formed another coalition to push for change, as lawmakers slowly gear up. Read More »

The Internal Revenue Service won a high-profile tax shelter case involving Bank of New York Mellon Corp. on Monday, in a ruling that could cost the company more than $800 million.

The Tax Court ruling likely adds fuel to a growing debate over corporate taxes in Washington, as lawmakers seek to close government budget gaps and shore up U.S. competitiveness. Also on Monday, Sens. Carl Levin (D., Mich.) and Sheldon Whitehouse (D., R.I.) introduced a bill aimed at closing a range of corporate tax loopholes, proposing to raise $189 billion over the next decade. The bill targets multinational corporations’ use of offshore tax havens to shelter profits from U.S. tax.

Other lawmakers, including many Republicans, also want to clean up the tax code, but use the savings to lower the U.S. corporate rate, now among the world’s highest. President Barack Obama also has focused on closing corporate loopholes, and could spell out more targets in his State of the Union address on Tuesday… Read More »

The Treasury Department will offer its long-awaited proposal to overhaul the corporate tax code on Wednesday, senior administration officials said, weighing in on an issue that will likely elicit reaction in boardrooms around the world and on the campaign trail in the U.S.

Treasury Department officials have worked on the plan for more than a year and have said it would lower the top rate corporations pay, limit or eliminate certain tax breaks, and broaden the base of companies that pay taxes. But Treasury Secretary Timothy Geithner was careful last week not to offer too many details as his staff finalized the proposal.

Republicans have also expressed interest in making changes to the corporate tax code, complaining of its complexity and have pushed for the White House to offer its proposal soon so both sides could potentially engage in talks. Still, passage this year could be difficult, with both sides at odds more broadly over tax policy and looming November elections potentially clouding any bipartisan deals. President Barack Obama’s decision to let Treasury handle the rollout raises questions about how much the White House plans to push to get this passed.

Mr. Geithner last week said the proposal would be more detailed than a broad framework but less specific than an actual legislative proposal. Read More »

Driving another spike in the idea of a corporate tax holiday, Sen. Carl Levin (D., Mich.) released a study suggesting much of the money companies claim is trapped overseas already is sitting in U.S. bank accounts.

ASen. Carl Levin (D., Mich.) (AP Photo/Alex Brandon)

The study is another blow to the already-bleak hopes of major multinationals for a corporate tax holiday that they say would let them bring home as much as $1 trillion in earnings to the U.S. Earlier this week, House Republicans approved an end-of-year tax bill that didn’t include the tax holiday, despite a big push by multinationals.

The companies argue that without the tax holiday, much of their foreign earnings will sit offshore indefinitely, and eventually be reinvested overseas, because bringing it home to invest in the U.S. would subject it to the high U.S. corporate tax. They say allowing them to bring the money back with a reduced tax rate – say, around 5% – would give the domestic economy a much-needed lift.

But on Wednesday, Mr. Levin cited a study by the Permanent Subcommittee on Investigations, which he chairs, showing that about half the foreign earnings of 27 big U.S. multinationals are already in U.S. bank accounts, or invested in U.S. assets such as Treasury debt, U.S. stocks and bonds and mutual funds. The money escapes U.S. tax because it’s still held by foreign subsidiaries of the multinationals, and hasn’t been paid to the U.S. parent companies… Read More »

When putting together big tax deals in Congress, sometimes it helps to start small.

Treasury Secretary Tim Geithner traveled to northwest Arkansas on Friday to visit the plant and labs of NanoMech, a small business that uses nanotechnology to manufacture a range of products, including biomedical implant coatings. Mr. Geithner used the occasion to tout a permanent, expanded version of the federal tax credit for research and experimentation.

The expanded R&E credit – also known as the R&D tax credit — is a relatively small-bore change compared to the dramatic corporate rate cuts and other changes in multinational taxation that are under discussion in Congress. But the R&E credit could be a likely part of any deal, according to some business executives. It might even emerge as a centerpiece for a smaller package of changes, if a full-bore overhaul of the corporate tax code doesn’t make it across the finish line. Read More »

While Congress considers an overhaul of the corporate tax system, CEOs are trying to get out front of criticism that multi-nationals aren’t paying a fair share. Cisco Systems Inc. CEO John Chambers will make the multinationals’ case to CBS’s Leslie Stahl during a CBS “60 Minutes” segment set to air Sunday.

Cisco is among the companies pushing for a U.S. corporate tax overhaul, including a rate reduction. It’s also pushing to let companies bring home the foreign earnings they have stashed overseas at an ultra-low rate. (The money isn’t taxed by the U.S. until it’s brought back.) U.S. companies argue that their foreign competitors pay nothing – or next to nothing – to their home countries on their foreign earnings, and that they would face a competitive disadvantage if they paid the relatively high U.S. rate on overseas profits.

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